Core Concepts
Premium / Discount Pricing
Above the 50% level of a leg is premium (expensive), below is discount (cheap) — trade supply in premium and demand in discount
Premium and discount pricing divides every leg (swing high to swing low) at the 50% equilibrium level. Premium is above the midpoint — where price is expensive and supply zones are most effective. Discount is below the midpoint — where price is cheap and demand zones produce the strongest reactions. This framework prevents you from buying in premium or selling in discount, which is the most common structural mistake.
✓How to Recognize
- •Draw the 50% level between the current swing high and swing low to divide the leg into premium and discount
- •In a bearish leg, expect price to correct into premium before the next bearish impulse — sell supply in premium
- •In a bullish leg, expect price to correct into discount before the next bullish impulse — buy demand in discount
- •The stronger the zone AND the deeper it sits in premium/discount, the higher the probability of reaction
⚡How to Avoid
- →Buying demand zones that sit in premium — price is expensive and the demand is likely a complex pullback
- →Selling supply zones that sit in discount — price is cheap and the supply lacks conviction
- →Ignoring the 50% equilibrium when ranking zones — location within premium/discount directly affects probability
- →Treating all zones equally regardless of their premium/discount positioning